Downtown retailer surviving recession

From polishing jewelry and fixing clasps to carving custom molds, Jaime Laza has spent more than 30 years working his way up the jewelry industry - the hard way.

Today, "hard" is a word often used by 61-year-old Laza and other jewelers to describe the economic challenges battering the industry, including the high cost of gold and competition from chain stores that often undercut independent jewelers.

"In this economy, people have to worry about other things, so they may spend less on luxury purchases like jewelry than they would have in the past," said Laza, owner of Renaissance Fine Jewelry, near Washington Street and Central Avenue in the Copper Square neighborhood of downtown Phoenix.

Still, Laza has managed to hold his own by carving out a niche for downtown shoppers. His store has been in business since 1998 and is one of the ground tenants in Renaissance tower, a large commercial high-rise building near a busy light-rail stop.

Polished cases in his shop are full of glittering gold diamond rings, bracelets and necklaces, as bright mirrors line a key wall to draw customers to his high-end and often custom-made pieces.

"When everyone is selling similar things, you have to distinguish yourself," said Laza, recalling how he entered the industry.

Laza emigrated from Colombia in 1969, settling in New York City, where he worked in his brother-in-law's jewelry-district store as a polisher. The hours were long and the work harder than he expected.The job was meant to be a side gig while he studied to become a dental technician, but Laza fell in love with the trade and remained in the industry when he moved to Arizona in 1972.

He is known for his custom-designed jewelry, which Laza makes the old-fashioned way - with wax to cast the metal.

Much of the jewelry sold today is made by computer-generated machines. And often, gold jewelry sold by commercial jewelers in the U.S. are produced abroad in places like India, China, Thailand and Hong Kong, where large firms can produce numerous copies at reduced costs, he said.

That coupled with rising gold prices and cheaper mass-market jewelry sold on the Internet or by cost-cutters such as Costco Wholesalers and Walmart has accelerated the strain for small independent jewelers like Laza.

Customers, especially younger customers, often don't have the money to pay for higher-quality custom-made jewelry during the recession, he said.

The cost of gold hovered around $40 an ounce when Laza began in the industry. Since then, gold has more than tripled in value against the U.S. dollar.

Large commercial manufacturers have the technology to squeeze out every extra gram of gold, especially important when manufacturing in bulk.

"When a jeweler like me makes a custom ring by hand, I'm not as concerned about an extra 2 to 3 grams of gold because I'm making it by hand," Laza said.

Although many older customers still understand the value of custom-made, high-quality jewelry, others are tempted by more inexpensive mass-produced jewelry, said Laza, adding that not all mass-manufactured jewelry is low quality.

Purchases from specialty jewelers account for just 43 percent of all jewelry bought by American consumers compared with 73 percent in 1971, according to the International Diamond Exchange, which provides retail benchmark prices and research for traders.

Laza warns clients about cheaper offerings made with a bare minimum amount of gold, which makes resizing rings more difficult and can actually damage the jewelry.

He prefers white gold to platinum because of its durability and affordability. White gold also retains its value longer than silver, he added.

But selling his jewelry has been more of challenge because of the advent of the Internet.

The Internet has increased competition for small retailers because non-traditional Internet retailers require fewer employees, which keeps costs down. Hazy Internet sales-tax laws also mean that many shoppers often can purchase jewelry online tax-free.

"The Internet often undercuts small businesses like me," Laza said. "While older adults often want to see the person they are buying from, there's a new generation that doesn't need this human interaction to make a purchase."

Laza worries that the challenges his store faces may be insurmountable.

But the U.S. Bureau of Labor Statistics estimates that demand for skilled jewelers like Laza will grow as shoppers seek more customized jewelry.

More small retailers are launching websites to compete with online retailers, which should also help.

Although many independent jewelry stores did succumb to recessionary pressures in 2009, those that survived will find a "weeded-out playing field" and increased consumer confidence in 2010, estimates National Jeweler, which produces trade publications and a monthly forecast report on the jewelry industry.

The keys to remaining viable in an increasingly competitive industry are a combination of skills and service, said Laza, who frequently attends trade shows in New York, Los Angeles and Las Vegas, where he scouts unique pieces.